Teachers 'Additional Pension'

ViolaLass

Having just become a salaried teacher, I'll be joining the teachers' pension scheme this month.

I've been reading up on the additional pension and wondering whether I ought to invest. I've read the information on the TP website but I don't really understand how much I'd be paying and what I'd get in return.

Can anyone help on what questions I should be asking myself on this? Is it as straight-forward as 'how long will I live?' (being hit by a bus aside, women in my family have a tendency to go on and on...) or should I be considering other aspects too?

Thank you.

hugheskevi

Couple of related threads to read over here and here.

I don't really understand how much I'd be paying and what I'd get in return.

You pay either a lump sum, or a monthly payment over whatever period you choose. This purchases an amount of pension (eg £500 per year) that will be paid alongside your teacher's pension in the future. The amount will increase in line with CPI in future years.

Can anyone help on what questions I should be asking myself on this? Is it as straight-forward as 'how long will I live?' (being hit by a bus aside, women in my family have a tendency to go on and on...) or should I be considering other aspects too?

Primarily you should be questioning how much income you want in retirement, whether you will need more than the main pension will provide, and if so, what is the optimal way in which to achieve that income. The decision of whether or not to purchase Additional Pension fits into the third part of that.

Primarily your attitude to risk is what you should considering when comparing Additional Pension to other alternatives.

ViolaLass

hugheskevi wrote: »

Couple of related threads to read over here and here.

Thank you. I had read the first one, which appears to be about whether to be in the TP at all, but hadn't found the second one, which is helpful.

hugheskevi wrote: »

You pay either a lump sum, or a monthly payment over whatever period you choose. This purchases an amount of pension (eg £500 per year) that will be paid alongside your teacher's pension in the future. The amount will increase in line with CPI in future years.

That was one bit I hadn't understood, thank you.

hugheskevi wrote: »

Primarily you should be questioning how much income you want in retirement, whether you will need more than the main pension will provide, and if so, what is the optimal way in which to achieve that income. The decision of whether or not to purchase Additional Pension fits into the third part of that.

Primarily your attitude to risk is what you should considering when comparing Additional Pension to other alternatives.

As I'm only 28, I'm happy to take quite a lot of risk. I will want more income than I think the main pension will provide (especially as I do not expect to spend all of the next 40 years teaching in the UK). I have been working round this up til now by investing in a S&S ISA, figuring that that would give me some flexibility (while the pension would give me stability).

hugheskevi

I had read the first one, which appears to be about whether to be in the TP at all,

Oops, sorry, yes it isn't relevant - thought it was something else.

As I'm only 28, I'm happy to take quite a lot of risk. I will want more income than I think the main pension will provide (especially as I do not expect to spend all of the next 40 years teaching in the UK). I have been working round this up til now by investing in a S&S ISA, figuring that that would give me some flexibility (while the pension would give me stability).

Sensible, especially if you are not a higher rate taxpayer.

You should consider a personal pension instead of (or conceivably as well as) Additional Pension - there is no correct answer as to which is best.

chucknorris

ViolaLass wrote: »

Having just become a salaried teacher, I'll be joining the teachers' pension scheme this month.

I've been reading up on the additional pension and wondering whether I ought to invest. I've read the information on the TP website but I don't really understand how much I'd be paying and what I'd get in return.

Can anyone help on what questions I should be asking myself on this? Is it as straight-forward as 'how long will I live?' (being hit by a bus aside, women in my family have a tendency to go on and on...) or should I be considering other aspects too?

Thank you.

I started lecturing just over 2 years ago and now I am buying additional pension, there is a calculator here which calculates how much you pay for what you get:

https://www.teacherspensions.co.uk/public/resources/calculators/scheme-reform-pension-calculator.aspx

This bit is very important!:
Within the first 12 months of joining the TPS you can add an existing private pension to the scheme. Unfortunately I did not find out until after the 12 months period. I don't know how favourable the terms are but they will give you details of how it would work before you decide.

ViolaLass

I've been looking at this question again and trying to clarify how much extra pension a certain payment gets me e.g. if I pay in a lump sum of £250, how much extra pension will I get?

I understand that factors such as age make a difference here but I can't get the calculator on the teachers' pension website to work (it downloads and I put the info in but then nothing happens). Does anyone know of a calculator or table elsewhere that would give me this information?

Thanks.

jem16

ViolaLass wrote: »

I've been looking at this question again and trying to clarify how much extra pension a certain payment gets me e.g. if I pay in a lump sum of £250, how much extra pension will I get?

Nothing at all if you were to pay in £250 as a lump sum.

Female, age 28, normal retirement age of 65 with no dependant's benefits would cost £1650 lump sum to purchase £250 of additional pension.

I understand that factors such as age make a difference here but I can't get the calculator on the teachers' pension website to work (it downloads and I put the info in but then nothing happens). Does anyone know of a calculator or table elsewhere that would give me this information?

Thanks.

This is the calculator for the Scottish scheme and it works fine so long as you have Excel.

http://www.sppa.gov.uk/index.php?option=com_content&view=article&id=187&Itemid=545

ViolaLass

jem16 wrote: »

Nothing at all if you were to pay in £250 as a lump sum.

Female, age 28, normal retirement age of 65 with no dependant's benefits would cost £1650 lump sum to purchase £250 of additional pension.


This is the calculator for the Scottish scheme and it works fine so long as you have Excel.

http://www.sppa.gov.uk/index.php?option=com_content&view=article&id=187&Itemid=545

Thanks jem, that was very helpful. I suspect the sheet isn't working for me (yours doesn't either) because I have a Mac.

That £250 being bought with £1650, would that be £250 in 'then' money? And index-linked?

jem16

ViolaLass wrote: »

Thanks jem, that was very helpful. I suspect the sheet isn't working for me (yours doesn't either) because I have a Mac.

Possibly. I hadn't tried it with a Mac. Let me know if you want me to try some other calculations, such as a monthly amount as opposed to a lump sum.

That £250 being bought with £1650, would that be £250 in 'then' money? And index-linked?

The £250 would be index-linked from when you purchase it and continue to be index-linked in retirement, so yes it's £250 in "then" money.

kidmugsy

In your shoes, OP, I'd consider waiting until my contributions let me avoid higher rate tax. On the other hand, by then the opportunity might no longer exist.

zagubov

Make sure when you top up you look at the Teacher Pensions Agency's schemes before any of these AVCs that people are pushing on you.

I c0cked this up big time years ago and spent a fortune on very poor value AVCs so please feel free to learn from my mistake.